COVID-19

Holiday surge in e-commerce could cause delivery crunch

Meghan McCarty Carino Nov 27, 2020
Heard on: Marketplace
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A postal worker loads packages into a mail truck outside a USPS center in Los Angeles, California, in August. Kyle Grillot/AFP via Getty Images
COVID-19

Holiday surge in e-commerce could cause delivery crunch

Meghan McCarty Carino Nov 27, 2020
A postal worker loads packages into a mail truck outside a USPS center in Los Angeles, California, in August. Kyle Grillot/AFP via Getty Images
HTML EMBED:
COPY

The Black Friday tradition of hordes of crazed shoppers storming big-box stores has become more subdued in recent years as shopping increasingly moves online. This year, as the pandemic surges, the trend will only intensify, causing an unprecedented volume of packages that need to be delivered.

Adobe predicts American consumers will shop 33% more online this holiday season.

The good news is we’ve had a bit of a dress rehearsal, said Adie Tomer, a fellow at the Brookings Institution Metropolitan Policy Program.

“Amazon was the great example where they had holiday-level crush in the spring,” he said. “But they got it under control through a mix of investment and learned expertise.”

The shutdowns early in the pandemic caused a sudden surge in e-commerce that no one had anticipated, leading to big delays. Since then, retailers and package carriers have been preparing, staffing up and building new fulfillment centers. 

But that may not be enough, said Satish Jindel, president of shipping software company, ShipMatrix.

“People who are expecting packages should be prepared that many more of them this year will take a day or two days longer,” he said.

ShipMatrix estimates the demand for shipping will exceed capacity by about 7 million packages a day — about three times as many as last year.

FedEx and UPS have limited the volume of packages they take on to keep on-time performance up. So much of the overflow will end up with the United States Postal Service, said Gordon Glazer, a senior consultant with Shipware.

“Unfortunately, the Postal Service doesn’t have the ability to limit packages or volume and have become the de facto carrier of last resort,” he said.

USPS, which is a Marketplace underwriter, is still recovering from slowdowns over the summer, though on-time performance has improved.

Meanwhile, many retailers have partnered with on-demand delivery services like Instacart or Shipt, promoted curbside pick-up and started Black Friday sales early in the month, said Michael Brown, partner and retail lead with Kearney Management Consultants.

“Many retailers have been promoting early to try to push some of that demand forward,” he said. “But there will be early cutoffs to get deliveries in time.”

Brown said consumers who don’t get their orders in by Dec. 15 could end up with some empty space under the tree.

COVID-19 Economy FAQs

With a slow vaccine rollout so far, how has the government changed its approach?

On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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